A new push by state-licensed sports betting platform Sporttrade could shake up how prediction markets are regulated in the U.S.
Chief executive officer Alex Kane has formally asked the Commodity Futures Trading Commission (CFTC) for permission to operate across all 50 states.
The important move would place Sporttrade alongside federally regulated platforms like Kalshi, Robinhood, and Crypto.com.
“They’re Doing Irreparable Harm”
Kane believes the current setup is unfair. While his company follows strict state-by-state gambling laws in states like New Jersey, Virginia, and Arizona, competitors like Kalshi are allowed to operate under a single federal license, without navigating the patchwork of local regulations.
Kane believes this imbalance is hurting Sporttrade’s business. “They’re doing irreparable harm,” he said of the federally regulated platforms.
Prediction markets allow users to buy and sell contracts based on the outcomes of sporting events, including the NBA, NHL, or golf. In practice, they look a lot like betting.
Unlike sportsbooks, however, these platforms are not overseen by state gaming regulators. Kane doesn’t deny the similarities. “You’re not going to hear me say this isn’t sports betting,” he said. “That’s a ridiculous comment.”
Kane’s April 25 letter notified the CFTC that Sporttrade was working on “a formal no-action relief request” to “accept trades on event contracts without formal federal registration.”
A Potential Hybrid System Underway
Kalshi and other platforms have drawn scrutiny in states where sports betting is legal. New Jersey, Nevada, and Maryland have issued cease-and-desist letters, arguing that Kalshi is operating illegally without a state license.
Kalshi has fought back in court, claiming that only the CFTC has the authority to regulate them.
“We are literally like a financial exchange, but the underlying trading is events,” said Kalshi co-founder Tarek Mansour.
“The CFTC is our regulator. If the CFTC tells us to stop, we will absolutely stop. If they don’t, then we won’t.”
If the CFTC grants Kane’s request, Sporttrade would become the first operator to be both federally- and state-regulated, a unique hybrid status that could change how sports betting platforms function in the U.S.
Kane, however, isn’t worried about pushback from state regulators. “I know our regulators well,” he said.Other major operators are watching closely. Rush Street Interactive chief executive officer Richard Schwartz said the company was “aware of all possibilities” and open to entering the prediction market if the rules change.